Sterling fell around 0.2 per cent against the euro and the US dollar to 1.1316 and 1.2605 respectively, amid the opening of Parliament and the outline of Theresa May’s legislation as Brexit gets under way.
Bank of England Governor yesterday hammered Britain’s currency as he ruled out an interest rate hike in the near future.
Expectations of a rise had grown after three members of the Bank’s Monetary Policy Committee last week voted for a rise – but Mr Carney said Brexit and political uncertainty means rates should stay on hold at 0.25 per cent.
The Queen’s Speech laid out bills and draft bills for the next two years, with the bulk of legislation relating to Britain’s departure from the European Union (EU).
David Madden, market analyst at CMC Markets UK, said: “The Queen’s speech will be delivered by Prime Minister May at 11.30am, and even though there is still no deal between the Conservatives and the Democratic Unionist Party (DUP), traders are hopeful that one will be reached.
“We are expecting to hear a lot about Brexit in the Queen’s speech, and some clarity on the situation would be welcomed by investors.
“The GBP/USD is at a two month low as the dovish commentary yesterday from the Bank of England Governor, Mark Carney, is still putting pressure on the pound.
“Mr Carney wants to keep interest rates low because Brexit talks begun this week, and he would rather a loose monetary policy while the outcome is still uncertain.”
After Mrs May lost the Conservative majority in the election, today’s Queen’s Speech is key to setting the tone of the new Government.
Connor Campbell, financial analyst at Spreadex.com, added: “Despite the state opening of parliament being just a few hours away, Theresa May is yet to fully secure the support of the DUP, the Irish party unhappy with what they see as a lack of respect from certain sections of the Conservatives.
“The Queen’s speech is set to outline a legislative programme much changed from the Tory election manifesto,…